Steinhoff’s Pepkor suffers another legal blow

27 June 2019 – Today Mr. Tekkie scored yet another legal victory in the ongoing saga involving the shareholders of the start-up retailer and Steinhoff-subsidiary Pepkor, relating to the use of the MR TEKKIE trademark.

Pepkor’s interlocutory application to have certain affidavits and procedural steps taken in the Mr. Tekkie trademark case declared as irregular steps was dismissed with costs by the Honourable Mr. Justice Siraj Desai. The interlocutory application was heard in the Western Cape High Court on June 3 and judgement was handed down this morning.

The judgement comes merely days after Steinhoff summonsed former Steinhoff CEO Markus Jooste and Pepkor founding CEO Ben La Grange to pay back more than R1-billion in salaries and bonuses earned whilst at the helm and in the employ of Steinhoff and Pepkor.

Jooste and La Grange, along with former Steinhoff COO Danie van der Merwe, were the founding [non-executive] directors of Pepkor at the time of its listing on the JSE in September 2017. Then called Steinhoff Africa Retail the business consisted of Steinhoff’s African retail assets. These assets included Tekkie Town, a truly South African business founded by Braam van Huyssteen, which was obtained later following an exchange of shares in Steinhoff that turned out to be worthless when Steinhoff collapsed in December 2017 after explosive revelations of accounting irregularities. These accounting irregularities were later labeled unlawful by the company’s own forensic investigation and has resulted in the uncovering of the largest corporate fraud in South African history.

The Tekkie Town vendors launched their restitution claim to restore their ownership in Tekkie Town in May 2018. Earlier this year they obtained an interdict against Steinhoff to prevent it from acting in any way in terms of its controlling share in Pepkor that will frustrate or block the return of the business to its rightful owners until after the main case had been heard.

Mr. Tekkie was launched in late August 2018. Since its launch, the fledgling business has s fielded a barrage of legal attacks by Pepkor. To date, Pepkor’s attempts have been futile and fruitless.

Mr. Tekkie has opened 24 stores since October 2018 with another two stores to open in late July. In the process, 251 direct jobs have been created and the retail industry has been stimulated by the entry of a new player with a fresh offering in athleisure apparel and footwear with an intense consumer service focus.

“We are grateful that the court dismissed Pepkor’s application and that it ordered Pepkor to pay our costs. We are fighting our cases with our own resources whilst I guess it is fair to say that Pepkor is doing so with shareholders’ funds,” said Bernard Mostert.

“It is, of course, peculiar that Pepkor has taken such a vindictive and aggressive approach towards us whilst they are ploughing ahead with a business in Tekkie Town that even on their own version was defrauded from its original owners,” added Mostert.

Pepkor Senior Management, as well as Pepkor Chairman Jayendra Naidoo, have all launched summons against Steinhoff seeking damages for transactions concluded prior to the Tekkie Town transaction. They too rely on claims of fraudulent misrepresentation and concealment of Steinhoff’s true financial position.

“At the most basic level, Pepkor’s leadership is highly conflicted given their legal actions against their controlling shareholder. Broken down to business basics, you have to ask yourself whether your employee will be in a position to deliver the best outcomes for the business if he or she was suing the owner of the business. Yet that is exactly the case with Steinhoff, Pepkor and Pepkor’s senior executives. We are grateful that we are fighting our case outside of this cloud of controversy and that our new business is gaining momentum.”